UPDATE 3-ERCOT sees another tight summer for Texas power supply

March 1 (Reuters) - Texas power grid operator said Friday
the amount of electricity available to serve consumers will be
tight again this summer as projected demand grows faster than
generation is being built to serve those needs.

"Current estimates indicate that we likely will see very
tight conditions on the hottest days," Kent Saathoff, vice
president of grid operations and system planning for the
regional grid operator Electric Reliability Council of Texas
(ERCOT), said in a statement.

The agency will likely increase its calls for consumers to
reduce power use on hot afternoons when air conditioners run for
extended periods, officials said.

To entice more power generation into the market, Texas
utility regulators increased the price at which power can be
offered in time of scarcity to $5,000 per megawatt-hour
beginning this summer. That amount will rise to $9,000 per MWh
by summer 2015.

While regulators continue to study new ways to increase
wholesale prices to levels necessary to attract additional
generation, no other market changes are likely to be implemented
ahead of the summer.

On Friday, the chairman of the Texas Public Utility
Commission (PUC) proposed opening another regulatory project to
look at implementation of an "operating reserve demand curve" a
way to improve the efficiency of scarcity pricing.

The time needed to fully evaluate and allow market comment
on the latest design alternative means changes are likely to be
delayed into next year.

"While I understand some stakeholders favor implementation
of an interim solution prior to this summer, I do not think such
a solution can be developed, vetted by stakeholders, and
implemented within that time frame." Chairman Donna Nelson said
in a memo discussed in a public meeting Friday.

ERCOT said its preliminary summer assessment anticipates a
peak demand of 67,998 megawatts (MW), based on a weather outlook
similar to that of 2010 and a slower-growth economic outlook.

The grid operator anticipates 73,708 MW of generation
capacity before accounting for power plant outages, which
typically total about 2,600 MW during an operating day.

That's 1,200 MW lower than the total listed in a report from
December that included a number of older, previously retired gas
units that ran only in the summer.

One megawatt can serve about 200 homes during peak demand
periods.

"Current trends call for a summer that is hotter and drier
than normal," Chris Coleman, ERCOT meteorologist, said in the
release. "Although we don't anticipate prolonged heat waves like
those in 2011, we expect conditions in many areas to be similar
to 2012."

The ERCOT region's all-time record peak occurred on Aug. 3,
2011, when consumer demand hit 68,305 MW. Power demands in the
ERCOT region are highest in summer, primarily due to air
conditioning use in homes and businesses.

Although the summer of 2012 was much milder than the
record-breaking conditions that marked the previous year, ERCOT
still experienced new monthly peaks in June, July and September.